Tag: Financing

Starting out as a government organisation that wanted to support SMEs in Cambodia during the pandemic, the Credit Guarantee Corporation of Cambodia (CGCC) has grown from credit guarantees to green financing and bond guarantees under the leadership of its CEO Wong Keet Loong. He’s been with CGCC since its inception to set up the company in October 2020. Today, CGCC has guaranteed an impressive $230 million in credit in 2,800 guarantees. Wong, of course, is no newbie to the world of credit given his prior experience working for the Credit Guarantee Corporation (CGC) of Malaysia. With 25 years of experience in banking, he’s a global expert on finance with stints in countries like Sri Lanka, Zimbabwe, among others. A certified chartered account, Wong has been a member of the Association of Chartered Certified Accountants (ACCA) since 1994.

The Credit Guarantee Corporation of Cambodia (CGCC) today has become a vital cog in Cambodia’s economy. Starting in the middle of Covid-19, the state-owned company’s guarantees provided a buffer of safety for many banks and financial institutions to continue lending to the country’s economy.

Wong Keet Loong – who earlier worked with the Credit Guarantee Corporation of Malaysia – was with the founding team of CGCC to start the enterprise from scratch. As the first CEO of CGCC, Wong has certainly left a towering legacy for the industry. Ministry officials, who spoke to Khmer Times, hailed the role he’s played in steering CGCC.

In an exclusive interview with Khmer Times, Wong says he also had the guidance of Ros Seilava, Secretary of State, Ministry of Economy and Finance and Chairman of CGCC, among other officials to help him navigate his new role.

CGCC’s journey started in July 2020 at the policy level and Wong was brought in – in an official capacity in October 2020. In the next nine months, Ministry officials set about creating a policy framework and guidelines for operations. “By March 2021, we launched our first credit guarantee scheme,” says Wong.

“When we started, our vision was clear: to establish the first credit guarantee institution in Cambodia. I am proud to say that we turned that vision into reality, laying the groundwork for a financial landscape that would support SMEs across the nation,” said Wong, adding, “CGCC was incorporated on November 3, 2020, and we started operations after four months when we launched our first Business Recovery Guarantee Scheme (BRGS).”

While 2021 had a slow start as CGCC tried to bring awareness to market participants on the need for credit guarantees, by 2022 the pace of its loan guarantees picked up. “In 2021, we guaranteed loans amounting to $21.3 million for 194 accounts. By 2022, we’d accelerated and guaranteed loans amounting to $71.4 million to 791 businesses,” said Wong, adding, “We maintained this pace in 2023 and guaranteed $72 million in loan amount for 943 accounts.” In total, CGCC guaranteed loans amounting to $164 million to 1,928 micro, small and medium enterprises (MSMEs) as of June 2024.

Today CGCC’s efforts have resulted in the approval of 2,800 guarantees, amounting to an impressive $230 million across all provinces. “A credit guarantee mechanism was much needed in the country. Today, as we enter our fourth year of operation, CGCC has proven to be a vehicle for sustainable financing of MSMEs,” said Wong.

In Cambodia, SMEs represent 70 percent of employment opportunities and contribute 58 percent to the country’s GDP. These SMEs are from diverse fields like agriculture, industry and services.

“But, the government noticed that there was a credit gap. Many were unable to get bank loans, so the government to address this problem created CGCC,” said Wong.

Some of the common hurdles SMEs face to accessing credit is their lack of credible financial records like credit scores and collateral. “They are also impacted by lack of financial literacy and good corporate governance models. But with CGCC backing them, deserving SMEs can now get much-needed credit to expand their business or get fresh capital for new ventures,” said Wong.

Looking at the portfolio of businesses that CGCC guarantees as high as 50 percent were SMEs in services and trade, 3 percent from agriculture, 7 percent from industry with miscellaneous other SMEs formed the remaining 40 percent.

CGCC has also played a vital role in job creation. In 2021, CGCC was instrumental in creating 4,671 jobs among SMEs. This number quadrupled in 2022 to 19,921 and by 2023 went up 40 percent to 28,148 jobs. “In total, CGCC has been instrumental in creating more than 52,740 jobs in Cambodia,” said Wong.

This year, CGCC also launched an “entrepreneurship programme initiative” to promote entrepreneurship and financial literacy among SME owners. In 2023, we reached another remarkable milestone by becoming the first Bond Guarantee institution in Cambodia. As part of that initiative, earlier this month, CGCC signed an MoU with the Securities and Exchange Regulator of Cambodia (SERC) to support Cambodia’s securities market by diversifying credit guarantee services to bond guarantees. It also signed an MoU last month with GuarantCo to provide guarantees for local bonds, an international guarantee company funded by several European countries namely the UK, the Netherlands and Switzerland to provide additional bond guarantee capacity and technical assistance to CGCC.

“A guarantee from us will be reassuring for institutional investors and the public – as CGCC has got a local credit rating of khAAA. It would also be reassuring to prospective bond investors that our partner GuarantCo is a Fitch “stable” and “AA” rated entity,” Wong said. “This achievement marks our support towards all segments of SMEs including larger SMEs by raising bonds guaranteed by CGCC.”

“Our vision has expanded now and we’ve also set up a Sustainable Green Financing Facility and this bond guarantee scheme for which we hope we’ll have a valuable partner in SERC, CSX and partners like GuarantCo,” said Wong.

Ros Seilava, Secretary of State, Ministry of Economy and Finance and Chairman of CGCC, in an earlier interaction, said, “CGCC’s guarantees will promote innovative financing and financial products which will support economic diversification and improve Cambodia’s competitiveness in line with the Pentagonal Strategy-Phase 1 for Growth, Employment, Equity, Efficiency and Sustainability of the Royal Government of Cambodia of the Seventh Legislature of the National Assembly.”

Wong said, he finds it “hard to believe that it has been four years since I first arrived in Cambodia during the Covid lockdowns and reported to work at the Ministry on October 1, 2020. I can still remember those days when it was much quieter and less traffic. It has been an incredible journey together, and what a journey it has been for me!”

In 2020, CGCC launched its first scheme the Business Recovery Guarantee Scheme (BRGS). Today it has as many as five individual guarantee schemes eg. Women’s Entrepreneur Scheme, Co-Financing Guarantee Scheme to support SME Bank’s Co-Financing Scheme and Post-Harvest Fisheries Guarantee Scheme.

“We also launched the Portfolio Guarantee Scheme specially tailored for specific FIs and notably the Rice Export Guarantee Scheme to support the rice exports of 1 million tonnes in 2025. Our current launch of the Sustainable Green Financing Facility (SGFF), our blended financing facility to support Green financing, a facility targeted to promote green technology in addressing climate change.

These guarantee schemes position CGCC to play a vital role in empowering entrepreneurs and developing various sectors,” said Wong.

Wong also said over the years, CGCC has forged strong partnerships with 27 Participating Financial Institutions (PFIs), collaborating to create a robust ecosystem that supports our SMEs.

“I am also pleased to share that CGCC has recorded good financial performance with its total equity increasing from $200 million to $235 million with a growth of 15 percent. With the increase in our equity, it increases our guarantee capacity and sustainability,” said Wong, adding, “This growth is a testament to the hard work, dedication, and unwavering support from every staff member of CGCC and the Ministry.”

Wong said that he is grateful to CGCC’s Chairman, Board of Directors and all our stakeholders and partners ie. development partners eg. World Bank, ADB, UNDP, UNIDO, financial institutions and SME associations. “It has been a privilege to work alongside such dedicated partners and stakeholders who share our vision for a vibrant and inclusive economy. Your collaboration, insights and unwavering support have been the backbone of CGCC’s achievements. I urge you all to continue this journey with us, to keep supporting CGCC as we strive to empower even more SMEs and enhance financial inclusion across Cambodia,” he said.

Wth the new CGCC CEO No Lida all set to take over, Wong said, “I wish CGCC continued success in playing a critical role in developing our SMEs. Together, we can build a brighter future for our entrepreneurs and our economy.”

 

Credit to: Khmer Times, Published on 30 September 2024